Friday, September 30, 2011

Rules on Portability of Unused Exemption of Deceased Spouse

In addition to increasing the federal estate tax exemption to $5 million, the 2010 estate tax law changes also permit the surviving spouse to utilize the unused portion of the deceased spouse's federal exemption. To enable this process, the estate of the deceased spouse must file a federal estate tax return even if the return would normally be unnecessary due to the estate being less than $5 million.

Thursday, September 29, 2011

Are Irrevocable Insurance Insurance Trusts Still Necessary?

With a $5.0 million estate tax exemption, a trust to shelter insurance proceeds from estate taxes might not seem necessary. However, given the uncertainty about future estate taxes starting in 2013, owning insurance in an irrevocable Crummey trust makes sense for some people.

Wednesday, September 28, 2011

Should You Buy Long Term Care Insurance?

This writer argues yes, unless you are very wealthy, and gives some tips on navigating the process.

Friday, September 23, 2011

How Difficult Is It To Serve as Executor of an Estate?

A very negative portrayal of an executor's duties which make the task seem much more difficult than it usually is.

Thursday, September 22, 2011

How Families Handle Inherited Wealth

Fascinating article about how families deal with the benefits and pitfalls of large sums of inherited wealth. The story about the Norton family in Minnesota is a blueprint on how to handle it successfully and prepare children for their futures. The article also had the following tips which apply to all families:

The Stages of Wealth

Start educating your child early, and keep at it well into adulthood.

AGE 8: Each week put a small allowance -- $1 to $5 in dollar bills -- into an envelope and hand it to your child. Explain that it's up to him to decide whether to buy candy or save up for, say, a skateboard. (Don't undercut the lesson by buying the skateboard yourself.)

AGE 10-12: Invite your child to start attending regular family meetings. Discussion items: How lucky we are to be financially comfortable and what we as a family think is the purpose of our money. Should we take fancy vacations or give to charities? Make it clear your kid's opinion matters.

AGE 12-14: Make sure your kid knows how to manage a checkbook. And at the family meetings, start making it clear where the family money came from–somebody's hard work! Start setting future expectations: Tell your child, "You're going to have to make your own fortune," or "Someday this will all be yours to preserve."

AGE 14-16: Don't be afraid to invite your banker or financial advisor to attend family meetings. It can be easier to have a neutral third party broach delicate topics such as a prenup and how much money you plan to leave your kids.

AGE 15-20: If the message isn't getting through, initiate steps for a "beneficiary rescue." Shift assets from normal investment accounts and minors' trusts into entities that you firmly control, such as family limited partnerships.

AGE 20-25: Make it clear you'd welcome your kid into the family business -- as soon as he's ready. College is a first step, and training at someone else's company can offer perspective. Remind your child that you love him and have total confidence in his ability to make his own way into the world. He'll thank you for it when he's 40.

Tuesday, September 20, 2011

End of Life Planning

Article from Sunday's Cincinnati Enquirer about end of life decisions.

Monday, September 12, 2011

Wills That Favor One Child Over Another

Strategies for drafting a will that favors one child over another child(ren). I advise my clients to leave all children at least some amount (not the nominal $1), but provide that the bequest is conditioned on the child not contesting the will. If the child contests the will, he will lose his bequest.

Thursday, September 8, 2011

Rules for Retirement Account Beneficiary Designations

An overview of rules which apply to clients who re-marry but have children from a prior marriage. There is a distinction between 401(k) plans and IRAs because ERISA rules do not apply to IRAs which make them more flexible.

Tuesday, September 6, 2011